Charts – Weekly

Ploy back with her latest thoughts, she pointed out something interesting that there has been little movement in the USD Index, oil prices, gold etc..

After last week’s rally, we thought everything was back on track. But, as it turned out yesterday, it is too early to celebrate the comeback of bullish market.

Beside the quarterly resistance at which the SET is stalling, the index also face another weekly resistance at 1,214-1,224. The SET has tested this same resistance for 4 times in the past and couldn’t make a successful breakout. A tumble from this resistance usually pulls the index down to its 20-day moving average line (pointed with red arrows). It can be seen from the chart that, if the SET can’t make a strong rebound and a successful breakout above 1,214-1,224, it is likely to fall back, with downside as low as 1,100. That is the medium-term risk that we should be aware of.

 

For the short-term outlook, if the volatility continues this week, the SET may head down to test the support at 1,180 or 1,170-1,165. The 1,170-1,165 support is shown below. This week’s resistance is at 1,200-1,208.

 

In my opinion, the SET, and other equity markets, will be volatile and almost unpredictable for the rest of the week, given the unclear outlook in the US dollar index. If the US dollar index rebounds and heads up towards 79.90-80, the world’s equity markets may have a hard time rebounding. It requires the US dollar index to fall below the support at 79.30-79.11 in order for the equity markets to regain strength.

The US dollar index, the oil price, and the gold price are making me quite annoyed, as none of them is making the first move. The US dollar index is stalling, the gold price is sluggish and the oil price is rebounding very slightly and almost insignificantly. I feel as if everyone is holding as much cash as possible and waiting for some big news to really drive the market, or just someone dare enough to make the first move. We just have to wait for that move.

 

Meanwhile, for those who are trading in the SET, I think you should be more cautious unless the index breaches above 1,200-1,208 this week. And, if you trade mostly in the big-cap stocks, it may not be the right time for you, as shown in the charts below. Both the Bank and Energy sectors are backing down from similar resistances, the same resistances that causes the correction of 5-6% in both sectors. Therefore, apply caution if the SET Bank index falls below 450-448, it may head down to as low as 440 or 433-431. Similarly, if the SET Energy index falls below 21,230, it may head down to as low as 20,700-20,500.

 

Thanks again ploy! If you have any questions do not hesitate to contact her directly @ ploy@thaicapitalist.com

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